For startups that have multiple founders or shareholders, want VC funding, or intend to create a valuable company that can be sold for a fortune, the answer to whether the startup owns the IP rights to work created by company founders is critical. Contract Law Copyright Law IP Basics IP Mistakes & Blunders Patent Law Startup Basics

Small investors invest in entity 1 that licenses IP from entity 2. Value of IP increases and entity 2 is sold and eventually cancels entity 1′s license, making entity 1 worthless. 4) Pay-to-play or artificially low downrounds. Here are a few examples. 1) Issuing of senior securities with multiple liquidation preferences.
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Shame about not getting it in legal writing that you owned the original IP. Founded it as a California LLC but your potential VC wants a Delaware C-Corp? But if you can stomach that he’s a star and contingency work / risk sharing on IP claims is key! the link is here. Many people start companies arse backwards.
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Form a legal entity to operate the business (we’ll use a Delaware corporation as an example for Newco). In Part I , I gave a quick summary of the who, when and why of forming and documenting a new startup company. Stepping off the soapbox, let’s examine the highest level “To Do” list for a new startup: Formation, Governance and Equity.
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The C Corporation has been the structure desired by the funding sponsors affiliated with nearly all of the companies I have had an involvement. A C Corporation is registered with a state (Delaware for example) by filing the appropriate documents. Startup Blog Steps to consider to start and grow a company. It is not likely to happen! Now what?
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